South32 Limited has entered a binding agreement to acquire the Metropolitan Colliery and associated 16.67% stake in the Port Kembla Coal Terminal (PKCT) from an Australian subsidiary of Peabody Energy Corporation.
South32 CEO Graham Kerr said: “The Metropolitan Colliery is a natural fit within our portfolio and the acquisition is consistent with our strategy to invest in high-quality mining operations where we can create value.
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“The mine’s recently upgraded infrastructure and close proximity to Illawarra Metallurgical Coal will enable us to further optimise performance and unlock unique blending and resource synergies.
“We look forward to the Metropolitan team joining South32.”
The agreed offer includes fully funded, cash consideration of $200m and a mechanism whereby both companies will share commodity price upside in the first year of production, or on a minimum 1.3Mt should metallurgical coal prices grow an agreed forward curve.
The deal will see integration of a well-capitalised, underground operation that adds an average 1.9Mtpa of saleable metallurgical coal production. It leverages regional model and marketing capability, and also unlocks unique blending and resource synergies, including the potential development of CCL724 mining lease, which contains a 71Mt coal resource adjacent to the Metropolitan Colliery.
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